As sellers become tired of waiting for the buyers to show up and the number of foreclosures rise, real estate auctions have been getting press. Bigger Pockets reports on the return of real estate auctions in Colorado, Real Estate Bloggers explains residential real estate auctions is the fastest growing segment of the auction industry, MSNBC reports on EBay as an auctioneer of real estate, and yesterday, Larry at Real Estate Undressed critiques EBay as a horrible way to auction off houses.
I got a chance to speak with Stacy, the author of the new blog PaxBayArea (PAX = Pacific Auction Exchange) focusing on real estate auctions. She explains PAX’s business model is to ally with Realtors, not compete over properties with them. She discloses some of the financial logistics associated with the real estate auction process and how auctions benefit the Realtor…
How do houses go to auction and how does it benefit the listing agent?
The story behind PAX’s latest auction arises from a couple who moved from their Central Valley home and wanted to sell their house as quickly as possible. Their Realtor claimed that selling their house by auction would be the quickest method because preparing the house for sale plus time on market could take as long as 90 days +. The Realtor referred the couple to PAX. PAX is now auctioning their house this week and the referring Realtor still receives a 2% fee. In this market where listing agents have a tough time with a sale and are faced with losing a client as their listing agreement draws towards term, the auction referral may save the agent commission (at least 2% of it) and help recoup their marketing costs.
Here’s how buyer’s agents benefit from the purchase
Buyer’s agents benefit from commissions that range between 1.5% and 2%. The formula PAX uses in rewarding the agent is based on the spread between their opening bid and their final purchase bid. In other words, the more reasonable the opening bid is to meeting the final purchase price, the higher the commission rate. That encourages buyer’s agents to bid realistically, and not submit ridiculous, undervalued bids like $999.
PAX’s auctions generally start with minimum bids, but here’s their upcoming land auction of assorted parcels across California that is labeled an “Absolute Auction”, meaning each property will go to the highest bidder no matter what the price, even if it’s $1. And all of the parcels will go at the end of the day no matter what…
Technorati tags real estate auctions auctions home selling foreclosures
